ABG Shipyard to conclude equity sale deal by this fiscal end1 min read . Updated: 17 Feb 2016, 07:22 PM IST
The company is in talks with domestic and international investors for selling as much as 51% in the country's largest shipbuilder
Mumbai: Debt-laden ABG Shipyard Ltd is in talks with a clutch of domestic and international investors for selling as much as 51% in the country’s largest shipbuilder.
Syed Abdi, managing director and chief executive officer of ABG Shipyard, said the investors are either individual investors or a consortium of domestic and international investors.
“We are looking at diluting stake up to 51%. Investment banking firm SBI Caps is scouting for the investors on behalf of lenders," Abdi said on the sidelines of Make In India Week convention.
Lenders want the promoters to sell a stake to strategic investors to inject equity into the debt-laden company and effect some changes at the top management.
India’s largest private shipbuilder is in the midst of a corporate debt restructuring (CDR) exercise under which the creditors led by State Bank of India agreed last year to recast ₹ 11,000 crore of loans, offering ABG Shipyard a two-year moratorium on payment of interest, reduced borrowing cost and extended the repayment period.
ABG Shipyard’s CDR was the second largest loan recast undertaken in recent years by India’s banks, next only to the ₹ 13,500 crore debt reorganization for engineering and construction company Gammon India Ltd in July 2013. ABG Shipyard was hurt by a slump in the shipping industry, as freight rates fell in step with a decline in global trade, combined with a domestic economic slump.
ABG Shipyard was in talks with Germany-based Privinvest Holding for financial collaboration but it had failed, leaving the domestic shipbuilder with no option but to scout for another investor.
“We were looking at Prinvest Holding for future projects and defence projects. We would be now looking at an investor for existing projects. We have an order book of $2 billion and defence public sector undertaking are currently full and cannot take any more orders," Abdi said.
He said the company requires working capital of around ₹ 600-700 crore.
Abdi said ABG Shipyard’s promoter is passionate about shipbuilding and is very hands-on, adding “the promoter is here for the long term and hence not looking for any financial trade offs."